Richard Bluestein in now on board to direct/edit this project. The format is for each economist to answer 10 questions supporting their thesis. These will then be cut together into a mashup and posted to YouTube.

Both Steve Keen and Peter Schiff have agreed to participate in this. A bit of a delay – for the next two weeks, Peter is focusing on his senatorial campaign (if you live in CT. I suggest you vote for him).

That is to say, if two extremists can’t agree, it might not be due to an absence of any logic or data that would allow them to, but because neither can imagine a ‘both’ with which to concede.

It’s biflation. It’s pretty obvious inflation and deflation are happening at the same time, you just have to look at which commodity/asset type. As for the future… Name a date and predict which of the two prevails over the other, else the debate is pretty meaningless.

Though, of course, the project will create loads of drama, which will put bums on seats and get everybody all riled up. HATE! HATE! HAET!!1

I’m from Chicago and have had relatives living there for well along time my Great Grandfather was born there in 1875! The city has always been corrupt the state of Illinois too for that matter. However until the 70’s it was great place to live. The politicans were corrupt by in caring way then. The city didn’t have all the ghettos it has today. Chicago’s decline is similar to America’s in many ways: first many industrial job died and went away, second the white middle class fled for the suburbs and poor black and latinos replaced them and third people of all races just aren’t what they used to be. The neighborhood my grandparents lived in for 47 years went from nearly all White to all Latino in 15 years. Many were poor and their kids went bad and the area still hasn’t recovered.

…It’s biflation. It’s pretty obvious inflation and deflation are happening at the same time, you just have to look at which commodity/asset type. As for the future… Name a date and predict which of the two prevails over the other, else the debate is pretty meaningless.

This was pointed out as a product of QE/ZIRP by the extraordinary Henry C.K. Liu:

Asia Times Online, May 27, 2009Liquidity drowns meaning of ‘inflation’
By Henry C K Liu
“…When financial institutions deleverage with free money from the central bank, the creditors receive the money while the Fed assumes the toxic liability by expanding its balance sheet. Deleverage reduces financial costs while increasing cash flow to allow zombie financial institutions to return to nominal profitability with unearned income and while laying off workers to cut operational cost. Thus we have financial profit inflation with price deflation in a shrinking economy.

What we will have going forward is not Weimar Republic-type price hyperinflation, but a financial profit inflation in which zombie financial institutions turn nominally profitable in a collapsing economy. …

…Debt denominated in fiat currency is borrowed wealth to be repaid later with wealth stored in money protected by monetary policy. Bank deleveraging with Fed new money cancels private debt at full face value with money that has not been earned by anyone, that is with no stored wealth. That kind of money is toxic in that the more valuable it is (with increased purchasing power to buy more as prices deflate), the more it degrades wealth because no wealth has been put into the money to be stored, thus negating the fundamental prerequisite of money as a storer of value. …

…Thinking about the value of any real asset (gold, oil, and so forth) in money (dollar) terms is misleading. The correct way is to think about the value of the money (dollars) in asset (gold, oil) terms, because assets (gold, oil, and so on) are wealth. The Fed can create money, but it cannot create wealth. …

…Central bankers are savvy enough to know that while they can create money, they cannot create wealth. …The solution then is to make the working poor pay for the pain of inflation by giving the rich a bigger share of the monetized wealth created via inflation, so that the loss of purchasing power from inflation is mostly borne by the low-wage working poor and not by the owners of capital, the monetary value of which is protected from inflation through low wages. Thus the working poor loses in both boom times and bust times. …”

I also pointed FT Alphaville had noted the BoE’s deputy governor was on record stating one of the aims of QE is to stoke asset inflation:

Moving targets, QE edition
Posted by Tracy Alloway on Oct 13 15:21.
Here’s a significant development in the Bank of England’s quantitative easing, we think.

Charlie Bean, the Bank’s deputy governor for monetary policy, has just made a speech called “Quantitative easing: An interim report”, in which he rather moves the QE goal posts. The policy, we are now told, is not so much about getting banks to lend. It’s more about pushing up asset prices to repair banks’ balance sheets.

Here’s the relevant bit from the speech:

Fortunately, increased bank lending is not necessary for Quantitative Easing to work. Indeed, it was precisely because the Monetary Policy Committee expected the additional monetary injection not to stimulate bank lending directly at the current juncture, that the Asset Purchase Facility’s purchases were targeted at assets held primarily by the non-bank private sector. … Thus not only does the price of gilts rise as a consequence of the Asset Purchase Facility’s initial purchases, but also the prices of a whole spectrum of other assets. That in turn lowers the cost of non-bank finance and encourages increased corporate issuance. Also the rise in asset prices increases wealth and improves balance sheets. In this way, Quantitative Easing helps to work around the blockage created by a banking system that is still undergoing a process of balance sheet repair.

Wow. The contention that asset prices are rising doesn’t take the Sterling weighted index into account. The idea that wealth increases thanks to the BoE using the printing presses is Zimbabwe-crazy. The Bank is distributing wealth to the asset rich and taking wealth from the asset poor, its as if Robin Hood was reincarnated as an estate agent.

No creative destruction, just rigged market capitalism to bail out the rich at the expense of the poor, and provide them with greater advantage going forward.

>>Isn’t Schiff another rabid ‘the earth is only 6000 years old’ fundie?

no. there are vids of him on Youtube, the most popular being ‘Schiff was right’
debating shills about the economy and he knew exactly why it would crash.

The inflation – deflation debtate is nice intellectual debate to be a spectator to but does not have much to do with the real world. You can basically draw the line as deflation in value of derivative and paper assets and manufactured products where new slaves are found as cheap labour. But if it’s something tangible like gold and/or needs to be consumed on a regular basis e.g. food, oil, electricity there will be inflation.
From an overall perspective, if the question is deflation v inflation you might as well bet on stagflation average or channel trading. But, then a new derivative or scheme becomes the new propagandised miracle saviour for those countries who are losing manufacturing and tangible assets are imported or consumed quickly and the funny money finds a new home and up goes the rollercoaster again. The rollercoaster stops after govt debt crises and crashes, 87 crash was mainly involving investment firms, 07 crash involved the community more and ’17 will be govt debt imploding.
There, no need to make the vid, hope I didn’t ruin the ending.